For both parties, deficit ceiling talks reveal fault lines

With debt ceiling talks showing no progress, some GOP leaders and constituencies are becoming concerned by the party's hard line in negotiations. Meanwhile, some Democrats are similarly worried about President Obama's bargaining.

By
Dave Cook, staff writer /
July 14, 2011

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Senate minority leader Mitch McConnell (r.), seen here at White House talks about the debt ceiling Wednesday, has said he is worried about potential damage to the GOP.

Charles Dharapak/AP

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Washington

As the Aug. 2 deadline for raising the debt ceiling approaches, the high-stakes political discussions are exposing political fault lines within each party, and particularly among Republicans.

The White House says a basic agreement needs to be reached by July 22 in order to get legislation drafted and passed before the government reaches its $14.3 trillion debt ceiling. Negotiations at the White House Thursday between congressional leaders and President Obama were slated to discuss how to cut spending on Medicare and Medicaid and how to boost government revenue.

Throughout the week, several divisions within Republican ranks have become more pronounced, providing a more complex view of the party's interests than the well-known tea party-influenced hard line. Business leaders who are the traditional allies of Republicans have warned of the potential economic calamity of not raising the debt ceiling, while Senate minority leader Mitch McConnell suggested that intransigence on the issue could "destroy" the GOP brand.

This comes as some Democrats push back against Mr. Obama's willingness to negotiate on reforms to Medicare and Social Security.

With Republicans so far refusing even to consider any tax increases, however, the focus remains largely on them. They vow to support an increase to the debt ceiling only if it is counterbalanced by equally large deficit reductions, and their unwillingness to consider tax increases as part of a deal has led to an impasse.

A newly vocal business community was one sign of division. In a letter from several hundred corporate executives sent earlier this week, the business community weighed in on getting the debt ceiling raised.

“Failure to raise the debt ceiling would strike an immediate and serious blow to any economic recovery, and failure to make significant progress on long-term debt reduction will continue the uncertainty which is hampering our investment climate,” Business Roundtable President John Engler said in the document. Mr. Engler is the former Republican governor of Michigan.

Other executives added to the sense of urgency. “No one can tell me with certainty that a US default wouldn’t cause catastrophe and wouldn’t severely damage the US or global economy,” Jamie Dimon, CEO of JPMorgan Chase, said Thursday. He added that,” it would be irresponsible to take that chance.”

Republican congressional leaders also signaled their concerns. Senator McConnell proposed a plan that would let Obama raise the federal debt ceiling in three increments without guaranteed spending cuts and without Republican approval. In proposing the arrangement, McConnell warned that Republicans could “destroy” the party’s brand by allowing a default.

A new Quinnipiac University poll found that voters, by a margin of 48 percent to 34 percent, would be more likely to hold Republicans rather than the president responsible if the debt ceiling is not raised.

McConnell’s proposal got a cold reception from Republican House majority leader Eric Cantor who said, “currently, there is not a single debt limit proposal that can pass the House of Representatives.” He said additional spending cuts should be nailed down.

Many freshman Republicans with tea party ties have said they did not see a major risk in letting the government run out of borrowing room. Republican presidential candidate and tea party favorite Michele Bachmann said this week that, “I’m ‘no’ on raising the debt ceiling right now, because I’ve been here long enough that I’ve seen a lot of smoke and mirrors in the time that I’ve been here, but I haven’t been here long enough to forget who I serve or where I come from.”

In contrast, House minority leader Nancy Pelosi had positive words for McConnell's efforts. "What I think of what Senator McConnell, Leader McConnell, has advanced is that it is a recognition that we must lift the debt ceiling, and for that reason it has that value," she told a press conference Thursday. “Everyone who is concerned about lifting the debt ceiling is saying bravo for Senator McConnell.”

White House spokesman Mr. Carney said that while the McConnell plan is “not the preferred option,” the White House “appreciates the fact” the plan would uphold the full faith and credit of the United States

There have been reports of tension between House Speaker John Boehner and Congressman Cantor, with Cantor seen as taking a harder line in negotiations on the debt ceiling. But at a Thursday news conference, Speaker Boehner sought to quiet those rumors. Boehner put his arm around Cantor and said, “We have been in this fight together.” The speaker added “we’re in the fox hole.”

Meanwhile, there also have been divisions among Democrats. Most notably, Obama indicated a willingness to accept cuts in Medicare spending and changes in Social Security as part of a $4 trillion deficit-reduction plan.

That opened a gap with progressive members of the Democratic Party. Minority leader Pelosi responded to the president’s offer by saying, "We do not support cuts in benefits to Social Security or Medicare." Pelosi said such a step would “compromise support” from Democrats for raising the debt ceiling.